Sveaskog is Sweden’s largest forest owner with 14 percent of the country’s productive forestland. Its core business is selling timber and pulpwood, as well as biofuel. In addition, Sveaskog buys and sells land and develops forests as places for fishing, hunting and other outdoor activities. Sveaskog owns forestland worth around SEK 30 billion. In 2013, it had sales of around SEK 6 billion and approximately 700 employees throughout Sweden. The company is owned by the Swedish government.
The challenge of a price comparison of IT operations at a company or group is that ‘internal pricing’ cannot be compared with competitive market pricing. It is therefore important to gain clarity about the existing supplier’s delivery and agreements in order to gain a clear overall picture, including what cost components are included. Components that needed to be identified included staffing, administration, internal SLAs and, in particular, integrations and relevant interfaces. All of this allows fair comparisons to be made.
Telemanagement’s assignment was to analyse current agreements with individual items and to compare these with the market in order to develop a basis for negotiations with the existing supplier. Prepare a market price and agreement terms report for Sveaskog’s needs, comprising:
- Price indications and levels.
- Possible price development curve over time.
- Assessment of uncertainty in agreement terms and pricing.
- Baseline, definition of current pricing.
The benchmark analysis resulted in clarity in the documentation, clear objectives of what it was the company wanted to achieve for the price with the current supplier and recommendations for an appropriate agreement structure for IT operations. The specification of Sveaskog’s current status in relation to the market helped significantly in developing a suitable negotiation strategy.
Most important of all, Sveaskog finally achieved a pricing and agreement structure that it was satisfied with.